Wednesday, January 30, 2013

When Unexpected Contractions Strike

Ouch. The economy is contracting and apparently catching all the experts by surprise. Well, you know what that means, people. Pain, and lots of it. For us, not them.


Eat Your Peas and Tighten Your Belt!

 In a sane world, the Great Unexpected Shriveling would be cause for a mighty injection of some stimulative hormones in the form of a massive government-run jobs program, a financial transaction tax, a living wage law, appropriating the excessive wealth of the entire Walton Family with a special 90% Surtax Law enacted just for them, the breaking up of the too-big-to-fail/jail banks, Medicare for All and etcetera and so forth. We've shouted the solutions from the rooftops till we're hoarse.

What should be a wake-up call to the Austerity Cult will no doubt cause the deficit scolds to double down and call for even more cuts, leading to a recession or worse. Stay tuned for an amping up of their belt-tightening talking points. Paul Krugman is calling it the incestuous amplification effect. A group of elites in a bubble feed off one another's propaganda and then give birth to an unviable, genetically disenfranchised monster of an austerity policy. Pain for thee, riches for me. It's all about the perpetuation of the worst wealth inequality since the Gilded Age.

Meanwhile, Dean Baker is debunking one of the great economic myths of the Age of Obama: that the Bush tax cuts and two unfunded wars caused the deficit. They didn't. It was the market bubble. The much-ballyhooed "surplus" of the Clinton era was anything but. The revisionist history of "Clinton Paradise Lost" is only a fairy tale. Also see Gramm-Leach-Bliley. 

It also turns out that a reduction in military spending was a big cause of the unexpected contraction. So the endless wars have been artificially bolstering the economic numbers all this time! It was a War Bubble! No wonder it never felt like a real recovery to most of us. But now that the American Empire has extended its phony war on terror to the African continent in order to contain China, perhaps the contractions will ease when the market gives birth to yet another freak of nature to add to its already diseased, extended family.

12 comments:

Jay - Ottawa said...

“We've shouted the solutions from the rooftops till we're hoarse.”

Today, it’s austerity all over again. Yesterday, it was immigration. The day before, it was guns. The climate, the wars, the economy and civil liberties are always with us.

But ––

Do relatives at what should be happy gatherings agree that your political chitchat gets everybody down? Do you spend days before the computer absorbing one rant after another from the blog roll, then find relief by spending nights with your forehead pressed against the cool damp wall of the cellar? If so, you are one sad lefty: not much improvement over white-flag liberals selling out to plutocrats or Mencken wannabes mocking the plebs.

I project; it’s true. But there are more of you on the sidelines beside me similarly afflicted. How can we be both aware and a force? Are there attitudes and techniques that can advance the cause begun by Occupy? Where-o-where do we find allies to build the numbers needed to impress the PTB?

A new quarterly called “Jacobin” claims to be substantial and practical. It aspires to more than pointless bitching. (Try to forget the distracting association with Robespierre and the Reign of Terror. We’re not going there any more than the Poles, East Germans or Czechs had to in 1989.) Give “Jacobin” a look. Start with this essay by Peter Frase, “Modify Your Dissent.”
http://jacobinmag.com/2012/12/modify-your-dissent/

If you’re impressed, explore the publication further. Get back to us with your thoughts.

James F Traynor said...

I have just returned from the Jacobin and am not impressed. Perhaps because I'm in bad sorts generally. It reminds me of a discussion on the relative merits of fire extinguishers, while the goddamned house burns down. Jesus, are we verbose! I think intellectuals just love all this shit - it's like comfort food.

The fact is that Krugman is generally right, Dean is picking at lint, and the fucking ship is taking on water. The EU is listing badly and everyone is running around rearranging the deck furniture.
Screw it, I'm going to mess around with derivatives, the mathematical kind, simple shit for a simple mind. Everyone to his own poison.


Pearl said...

Jay:

Sorry, but trying to finish the Jacobin article you referred to made my head swim. We need simple, clear, statements of what is happening on the ground which Karen is a master of. We need the facts, the immediate connections to cause and effect, stated in language everyone can understand and Jacobin dueling
between different viewpoints within differences between each viewpoint is
too close to the ramblings of most philosophy professors whose vague
conclusions are ambiguous.

I appreciate your efforts, Jay. Most victims of our system are only interested in their next paycheck if there is one, a meal on the table, a decent home to raise children in and keeping their physical and mental health intact with proper medical help as well as avoiding being the next gun victim.

We have to concentrate on the immediate and then inject the reasons clearly and persuasively which will finally penetrate peoples' consciousness. I am sure those of us under Karen's protective wing are trying to do that for our friends and family and community. Every bit counts. And time will begin to reveal the gaps and cracks that are getting wider and wider and verify what we continue to shout about from the rooftops as Karen said.

Karen Garcia said...

I think Jay was referring to certain establishment corporate media/Obama hacks who criticize lefty bloggers as losers who live in their parents' basements and munch Cheetos. The Jacobin article kind of flummoxed me too, but then I do tend to have a low attention span in the late afternoon hours. I do most of my Internet trolling in the early a.m., write a little before the coma sets in, then come back to life somewhere between 10 and midnight when I read some actual books, alternating between serious stuff and pulp. Right now I am reading both "Gulag" by Anne Applebaum and "4:50 from Paddington" by Agatha Christie, alternating chapters. This reading habit tends to create weird dreams, but at least sleep is still free. I get my fun where I can find it.

The article Jay referenced actually praised the humor of Gawker and the Onion as being more effective stimulants for social activism than, say, wordy treatises in publications like the New York Review of Books. Brevity is the soul of wit, consistency is the hobgoblin of little minds, variety is the spice of life and other original thoughts.

Since I was trained in print journalism and have always had to deal with space constraints, my own writing tends to be short and hopefully succinct. New York Times op-eds are limited to 800 words. The typical blogpost is short and sweet, then people can flesh it out with comments/links of their own, which is what I aim for here.

There is kvetching and then there is kvetching. Those who can, bitch. Those who can't, pointlessly bitch.

Now excuse me while I go snarf down a bowl of Cheetos.

Zee said...

From the Dean Baker article referenced by Karen:

“There is a widely held view in Washington policy circles that the economy was golden in the Clinton years. We had strong growth, low unemployment, rising real wages, a soaring stock market and huge budget surpluses. According to this myth, George W. Bush ruined this Eden with his tax cuts for the rich and wars that he didn’t pay for. While there are plenty of bad things that can be said about George W. Bush, his tax cuts for the rich and his wars (whether paid for or not), this story of paradise lost badly flunks the reality test.

At the most basic level, the chain of causation is fundamentally wrong. The driving force in this story was the soaring stock market, which was in fact a bubble. Stock prices had grown hugely out of line with the fundamentals of the economy...”


“This collapse was the basis for 2001 recession which began less than 2 months after President Bush stepped into the White House. This downturn was the main culprit in eliminating the cherished Clinton budget surplus, not the tax cuts or the recession...”

“Ultimately the housing bubble grew large enough that it was able to boost the economy nearly back to full employment. By 2006 and 2007 the budget would have again been surplus had it not been for the wars and tax cuts. Of course the collapse of the [housing] bubble elminated the prospect of balanced budgets or anything like them for the foreseeable future.

The moral of the story is that the surpluses/small deficits of the last 15 years were the result of bubbles. It is not a good idea to rely on asset bubbles to fuel economic growth or to provide the basis for fiscal responsibility. The result was disastrous when Bush led us down this path. The picture was not much prettier when Clinton went the same route a decade earlier.”
– Bold emphasis added.

So. The phony stock market bubble drove the fabled, “golden...Clinton years.” When it burst, we sank into recession and high deficits, part of which was salvaged during the Bush years by the growth of the phony housing bubble.

When the phony housing bubble burst, we went into the worst financial crisis since the Great Depression, and a long, drawn out recession.

Now, the stock market is approaching its old record highs in defiance of what looks to me to be a weak economy. (I'm not economist to make a definitive statement.)

Sound familiar? Another phony bubble about to burst ?

INCOMING!!!

Jay - Ottawa said...

So the essay by Peter Frase in “The Jacobin” was a slog. Sorry.

Even though he swims in the abstractions of intellectual history, his goal is tangible and purposeful. As a PhD candidate in sociology, he can be expected to expatiate with bits from all the reading he’s done in recent semesters. Nevertheless, as a sociologist of the Left consorting with other lefty writers in their missionary effort, he may have sound ideas on how groups stick together or fall apart.

I believe Frase and “The Jacobin” are True Left for the reasons laid out in his critique of “The Baffler.” Alas, not till the middle or end of the essay, when we’re glazing over, does he try to define what is True Left. Words, tropes and appearances are deceiving. Blank negativity is not Left. Very well, what is being done positively by True Left to benefit the many?

We’ve wrestled with this issue before: what is True Left and what is Hollow Left? Cross words were traded here months ago with guests who claim to be Left, who sincerely believe they are Left, but whom we recognize as very much otherwise.

We have become expert at calling out the Hollow Men and Women in public office who claim to be Left or Progressive or Liberal or Moderate. The Good Book and common sense tell us “you shall know them by their deeds.” As for writers on the sidelines, you shall know them by those for whom they carry a torch. Why believe a self-proclaimed Lefty who, in a pinch, advocates for the right and votes right, especially in a contested state where it counts?

The rock-bottom issue for the real Lefty is MONEY. We are in a class war. A class war is about the distribution of money, not sexual mores or belief systems or education or culture. MONEY: more specifically, workers’ paychecks.

Beyond one’s stand about the distribution of money, it may be wise not to define Left too finely. We on the Left should welcome all, so long as they pass the purity test on the issue of money in the class war. If Zee has a fine set of rifles, unlike me, and believes in A, B and C, unlike me, but writes, acts and votes at every opportunity in opposition to the plutocracy, he is a Lefty as much as I and we should be glad to count him among our number. Because the class war, which is about our existential undoing, is all about money, not hobbies and side interests. And we need lots more allies on the money question if we’re ever going to reach a critical mass to roll back the 1%.

Frase claims “Marxism is creeping back into the fringes of polite intellectual discussion.” Well, hoorah! Marx who only a few decades ago was laughed off the stage by capitalism. What is the proletariat but what we call the 99%.

Frase brings up the term “peculiar inversions.” Publications once classified as lightweights, like the “Onion,” may be dependable sources of fact and perspective inspiring purposeful action by the many. I would add to Frase’s list of peculiar inversions ironists like Steve Colbert. His needling speech at the White House Correspondents Dinner of 2006 was no joke.

Some of the old left is dead weight. They hold us back. Worthy replacements to the ranks and a renewed militancy may come from unexpected directions: ironists, Tea Baggers, teachers, minimum wage workers, hedonists, bloggers, even the unemployed and debt-ridden young with all their electronic gadgetry.

“Today, the old may still be dying, but the new is already being born. Our task is to help it grow.”

Denis Neville said...

“The trajectory of Jacobin itself is evidence of the increasing permeability of the media to leftist ideas.” - Peter Frase

Having read Frase’s “Modify Your Dissent,” I must say that he seems rather full of himself.

I am not impressed with his critique of Thomas Frank.

Re-reading Thomas Frank’s “To the Precinct Station: How theory met practice …and drove it absolutely crazy,”

http://www.thebaffler.com/past/to_the_precinct_station

I’ll take Frank’s observations, sarcasms, and writing to Frase's posturing and cant. Frank points out the obvious, “For all its intellectual attainments, the Left keeps losing. It simply cannot make common cause with ordinary American people anymore.”

I am recalling the image of Rep. John Lewis (D-Ga.) being denied the right to speak, the very freedom of speech he marched and suffered for in the 1960s, to OWS protestors. “John Lewis is not better than anyone!”

Meanwhile, the plutocrats continue to consolidate total control…

The only solution to the problems caused by austerity (without jobs there’s less money in the economy and fewer people paying taxes), is more austerity (increasing resignation among both Democrats and Republicans that the across-the-board cuts will soon take effect, which Republicans say will provide the incentive to Democrats to agree to broader cuts).

Forty four percent of us lack enough savings or other liquid assets to stay out of poverty for more than three months if we lose our income. One third of us have zero savings. If we were only more disciplined and thrifty, leading lives of indentured servitude.

IMHO, until the Left recognizes the need for real leaders and concrete political programs, which OWS eschewed, they are never going to get anywhere with their “increasing permeability of the media to leftist ideas.”

Wu Hu said...

A major problem is that Democrats have a need to anchor their beliefs to a person rather than a goal. The cult of personality has become a serious disorder. Democrats cling to Obama, or some other political pundit father figure, then lose all objectivity. They have a need to accept the whole package without seeing the flaws, just like little children do with their parents. I can't wait for Democrats to grow into at least rebellious adolescents, but that seems unlikely under the care of Daddy Obama. That is why it would have been so much better if Romney had been elected. He would be doing the same exact things as Obama, only Democrats would have their eyes open.

In some of my Lifelong Learning classes, I have noticed fellow adult students doing the same thing. Rather than focusing on some theory, they get excited about the theorist and turn it into virtual celebrity worship, and talk as if they know the person or somehow are bonded with them. Once that happens, they lose all objectivity and critical analysis. You can't point out inconsistencies - they are not open to hearing it and risking their warm personal connection to their idol.

Try to speak to fellow Democrats about Obama's inconsistencies and failings, and you are likely to hear something like: "You're making me feel bad. Don't tell me about that stuff'. They need both the emotional connection and dependency on that person. It seems that many people are losing their willingness to feel discomfort of any kind. Better take a pill for that, or simple try good old generic Denial.

Democrats need to grow up and get over this American Idol personality worship, endure some real psychological discomfort like adults, and buck the system for a change.

Kat said...

Sorry to pile on but I'll proceed-- Jacobin is not what is needed now. I've read a few good things in there, but I had to bail on that article.
A friend turned me on to The Baffler during those golden Clinton years when even as informed as I was at the time something just didn't add up. So, it was something of a miracle to me. But friends, jargon free it was not. I lost patience with more than a few articles. I don't have a lot of fondness for Thomas Frank now either.
These times call for clear, sharp and to the point writing-- not impenetrable prose. I think that Karen's response to Thomas Friedman's column yesterday is more useful than any riff on The Baffler. Friedman's ideas which should be thoroughly discredited at this point continue to resonate throughout America. You hear them when your governor, your university president, your school board member, your local business leader, or your (ahem) president speaks. He should be ceaselessly mocked. And then he should be mocked some more.

Wu Hu said...

Thomas Frank is a classic example of another one of those celebrities whose words are worshipped by some people who can't stand hearing them criticized and are never able to detect any flaws in their statements or beliefs, even when those are documented on film and pointed out to them.

Kat said...

ha ha-- meant uninformed during the Clinton years. Not that I'm a fount of all knowledge now.

Zee said...

“Beyond one’s stand about the distribution of money, it may be wise not to define Left too finely. We on the Left should welcome all, so long as they pass the purity test on the issue of money in the class war. If Zee has a fine set of rifles, unlike me, and believes in A, B and C, unlike me, but writes, acts and votes at every opportunity in opposition to the plutocracy, he is a Lefty as much as I and we should be glad to count him among our number. Because the class war, which is about our existential undoing, is all about money, not hobbies and side interests.” – @Jay-Ottawa

@Jay--

If concern about the distribution of money in this country and opposition to the plutocrats are the two defining issues that make me a “Lefty,” well, you can increasingly describe me as such.

My participation here has been an eye-opener. Since Kat seems to be looking in today, I'll once again thank her for pointing me to the book Free Lunch, and others that she has urged me to read which are still sitting on the shelf waiting their turn.

You all have persuaded me that the economic “game” is entirely rigged in favor of the 1%, with the eager collusion of politicians at every level: local, state and federal. I have also reached the related conclusion that the arrogance and greed of the 1% are serious dangers to this country's well-being.

Just this morning over breakfast burritos with some of my retired friends we were discussing the usual potpourrie of guns, motorcycles, and the political/economic state of this country. I blurted out what I have learned from David Cay Johnston, that I believe that our entire government is deeply corrupt, rife with sweetheart deals that only benefit a select few while the rest of us get screwed. I further pointed out the disparity in prosecutions in the aftermaths of the S&L crisis of the '80s versus the financial crisis of 2008 as proof. The plutocrats and multinational corporations run this country, not us.

And to my surprise, no one disagreed with me.

Did I change the minds of some farty, old conservatives about the problems associated with the vast inequality of wealth distribution in this country? Probably not. But on those occasions when I interact with younger people, I intend to voice those same opinions. The point is, I'm speaking out.

Will I agree with you on every point regarding bringing the plutocracy “to heel?” Probably not.

My conservative nature bridles when Karen casually suggests that we go back to the 90% tax rates of the '50s and '60s as a [partial] solution to this nation's fiscal problems, and, jokingly—I hope—further suggests that we impose an arbitrary 90% wealth tax on the Walton family, just because we can. Arbitrarily setting figures that the wealthy should pay on current assets just sounds like theft to me, without, at least, fully understanding first the need and then where the “revenue” will be spent.

But a small tax on financial transactions? Well, I can live with that because it does have the added beneficial side effect of curbing these rapid-fire, large-scale, automated trades that send markets into tailspins from time to time.

I'm willing to listen, reason together, and learn. I only ask the same from you. I believe that we have more in common than you think.